With the rising cost of utility bills and homeowners becoming ever more aware of “going green,” many people wonder if solar panels could be a good investment. Maybe you want to save money on your electricity bills or would like to know whether solar installation will improve your home’s resale value? Before you make a decision, there are some things you need to know. Here are five things homeowners need to consider before installing solar panels.
What Is Your Current Electric Bill?
Solar panels can significantly offset your monthly electricity bill — and, in some instances, eliminate it entirely. If you have a high monthly bill, you’re more likely to benefit from installing solar panels. It’s important to note that electricity prices can fluctuate; therefore, your savings may not always be consistent. This is also true if your energy consumption changes for any reason. The average price of solar panel installation costs anywhere between $15,000 and $25,000. If your electricity savings are minimal, the ROI may not be worth it.
How Much Sunlight Does Your Home Get?
To work effectively and save you money, solar panels need exposure to the sun. If you live in a state such as Arizona or California, your home probably receives more sunlight hours per day on average. However, it’s also important to take into consideration the type of roof you have and how much shade there is around your home. If you want to estimate how efficient solar panels might be in your area, you can use a Solar-Estimate calculator.
Are Homeowners Incentives Available?
To promote alternate energy sources, the government offers incentives to homeowners for installing solar panels. For instance, tax-paying homeowners can claim a residential federal tax credit that allows them to claim 22% of installation costs for systems installed by Dec. 31, 2021. This tax benefit is non-refundable, so you can’t claim the savings in via a refund. However, you can reduce the amount you may owe on your taxes.
You may also be able to claim additional credits depending on your location. Some states offer cashback, waived fees, expedited permits, and property tax exemptions. In addition, some states allow homeowners to sell their excess power to local utility companies. As solar power becomes more lucrative, some states are reducing incentives, so time is of the essence.
What Is the Current Trade Policy?
Government trade policy can significantly impact solar panel prices. In 2018, the government imposed a 30% four-year tariff on imported solar panels, which reduces by 5% every year until February 2022. According to EnergySage, this tariff has caused an increase of $960 for the average six-kW system.
It’s important to note that although the cost of foreign-made panels may reduce, the amount of federal tax credit is likely to correlate. It’s important to weigh up all of the pros and cons before making a long-term investment.
Is Solar Energy Worth It?
Although solar panels can significantly reduce your energy costs, you won’t eliminate your electricity bill overnight. If you live in an area that receives lots of sun and pays high energy rates, the initial investment for solar panels is probably worth it. Although the full return on income can take many years to be realized, solar panels can be a desirable resale feature.
If you’re thinking about purchasing solar panels, it’s essential to shop around and find the best incentives. If you’re not ready to make the upfront costs, you can also lease solar panels. However, if you choose to lease solar panels, they will not increase your home’s value. You also won’t be eligible to take advantage of incentives.